Amazon.com 2002 Annual Report Download - page 49

$197 million, purchases of Ñxed assets of $50 million and cash paid for acquired assets of $6 million. Cash
provided by investing activities during 2000 was $164 million, consisting of net sales of marketable
securities of $361 million oÅset by cash paid for investments of $63 million and purchases of Ñxed assets
of $135 million.
Net cash provided by Ñnancing activities during 2002 was $107 million, consisting primarily of
proceeds from exercises of stock options, oÅset by repayments of long-term capital lease obligations. Net
cash provided by Ñnancing activities during 2001 was $107 million, consisting primarily of proceeds from
the issuance of common stock to America Online as well as exercises of stock options, oÅset by
repayments of long-term capital lease obligations. Net cash provided by Ñnancing activities during 2000
was $693 million consisting primarily of net proceeds from issuance of 690 million Euros of 6.875%
PEACS. We expect cash proceeds from exercises of employee stock options to decline over time as we
plan to issue restricted stock units as our primary vehicle for employee stock-based awards.
We believe that current cash, cash equivalents and marketable securities balances will be suÇcient to
meet our anticipated operating cash needs for at least the next 12 months. In addition, we expect to have
positive free cash Öow (operating cash Öow less purchases of Ñxed assets) for Ñscal year 2003. However,
any projections of future cash needs and cash Öows are subject to substantial uncertainty. See Item 1 of
Part I, ""Business Ì Additional Factors that May AÅect Future Results.'' We continually evaluate
opportunities to sell additional equity or debt securities, obtain credit facilities from lenders, or restructure
our long-term debt for strategic reasons or to further strengthen our Ñnancial position. The sale of
additional equity or convertible debt securities could result in additional dilution to our stockholders. In
addition, we will, from time to time, consider the acquisition of or investment in complementary
businesses, products, services and technologies, and the repurchase and retirement of debt, which might
aÅect our liquidity requirements or cause us to issue additional equity or debt securities. There can be no
assurance that Ñnancing will be available in amounts or on terms acceptable to us, if at all.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
We are exposed to market risk for the eÅect of interest rate changes, foreign currency Öuctuations and
changes in the market values of our investments.
Information relating to quantitative and qualitative disclosure about market risk is set forth below and
in Item 7 of Part II, ""Management's Discussion and Analysis of Financial Condition and Results of
Operations Ì Liquidity and Capital Resources.''
Interest Rate Risk
Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio
and our long-term debt. All of our cash equivalent and marketable Ñxed income securities are designated
as available-for-sale and, accordingly, are presented at fair value on our balance sheets. We generally
invest our excess cash in A-rated or higher short- to intermediate-term Ñxed income securities and money
market mutual funds. Fixed rate securities may have their fair market value adversely aÅected due to a
rise in interest rates, and we may suÅer losses in principal if forced to sell securities that have declined in
market value due to changes in interest rates.
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